Andhra Budget Projects Deficit Of Rs 562.08 Crore

No fresh taxation measures have been proposed in the Andhra Pradesh budget for 1997-98, which has projected a deficit of Rs 562.08 crore. Significantly, yesterdays 70-page budget speech by state finance minister P Ashok Gajapathi Raju omitted any reference to the prohibition imposed by the Telugu Desam Party (TDP) government two years ago.

This has fuelled speculation that the cash-strapped government may relax the stringent provisions, which are estimated to be costing the state exchequer Rs 1,500 crore per annum. Raju also did not make any reference to the World Banks response to the governments request for massive assistance for its restructuring process.

 

An expenditure of Rs 13,097.05 crore has been estimated under the non-plan head, while Rs 3,809.60 crore has been allocated for state plan expenditure, leaving a revenue gap of Rs 1,181.45 crore during the year. After taking into account the overall transactions of the year, the net deficit would be Rs 301.27 crore. With an opening deficit of Rs 260.81 crore, the state would incur a net deficit of Rs 562.08 crore for 1997-98, said the minister.

The finance minister referred to the fiscal adjustment measures initiated last August to mop up an additional Rs 2,800 crore through fresh taxes and reduced subsidies and described them as only the beginning of a difficult process of adjustment. He promised substantial fiscal restructuring, aimed at striking a judicious balance between a social safety-net programme and a development strategy.

The restructuring programme will create a virtuous circle in which fiscal and accompanying sectoral reforms will enable the state to rebuild its infrastructure, stimulate private investment, accelerate growth and create employment and income for a larger segment of the population, he said.

Raju said that a detailed study by the World Bank of the states economic performance and financial management had brought out disturbing trends. The study revealed that despite the states rich resource base and physical and geographical advantages, its gross domestic product has grown by only 4.6 per cent per annum since the 1980s against the national average of 5.2 per cent.

The minister identified the structural weaknesses in the states finances as: a deteriorating public finance situation characterised by growing revenue deficits and increasing cost of debt; a decline in the pace of capital formation; inadequate provision for physical infrastructure; insufficient allocations for human resource development, especially primary education and public health; and inefficient resource utilisation.

Raju referred to the recent cyclone that hit the Godavari districts and said the World Bank had indicated its willingness to consider a $170-million reconstruction package.

An appraisal team was expected later this month to finalise the proposal, he added.

The ministers speech came in for severe criticism from the opposition, with all the major parties taking strong objection to the lack of any mention of prohibition and other welfare schemes.

Opposition leaders pointed out that the government had promised to reduce the revenue deficit of Rs 1,181.45 crore to a net deficit of Rs 562.08 crore without offering any explanation about how it planned to mobilise the remaining Rs 619.37 crore.

In the absence of any indication from the government, it is obvious that the state will either dilute or scrap the welfare measures, including prohibition, to arrive at the net deficit, they said.

Congress floor leader P Janardhan Reddy lashed out at the ruling TDP which promised a subsidised rice scheme, prohibition and subsidised power tariff to farmers during elections for diluting the rice and power schemes by increasing prices and now planning to do away with prohibition to reduce the revenue deficit.